'gem-studded' is a compound formed from 'gem' and the past-participle form 'studded'. 'gem' originates from Old French 'gemme', ultimately from Latin 'gemma', where 'gemma' meant 'bud' and later 'jewel'; 'studded' comes from the verb 'to stud' (Middle English 'studen'/'stouten' and related Germanic forms) meaning 'to set or ornament with small decorative items (studs)'.

'gem' entered English via Old French 'gemme' (from Latin 'gemma'), and the verb 'to stud' existed in Middle English; the compound 'gem-studded' developed in modern English by combining these elements to describe objects 'set with gems'.

Initially the components referred to 'jewel' (gem) and the action 'to set with studs'; over time the compound came to specifically mean 'decorated with gems' rather than merely 'set with studs'.